Wednesday, March 09, 2011

Obamacare update

Dr. Sandy Chung, a Virginia pediatrician, says she is inundated with requests to prescribe nonprescription drugs because of the new health law.

Patients are demanding doctors' orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone's radar. It says people who want a tax break to buy such items with what's known as flexible-spending accounts need to get a prescription first.

The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.

"It drives up the cost of health care as opposed to reducing it," says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children's cold medicine.

Though the new rules on over-the-counter drugs amount to a small part of the massive overhaul of the health-care system, the unintended side effects show how difficult it can be to predict how such game-changing legislation will play out in the real world.

Some doctors, irked by the paperwork and worried about lawsuits, are balking at writing the new prescriptions. Pharmacists and retailers say the changes mean they have to apply a personalized label on some 15,000 different everyday products for customers paying with certain debit cards.

In other words, rather than reduce health care costs the "reform" legislation is actually having the exact opposite effect. Now meet the geniuses that dreamed up this particular section of the legislation:

...Peeling back tax breaks for health plans was on the table in 2009 when lawmakers began drafting the health overhaul. Inside the Senate Finance Committee, aides to three Democratic and three Republican senators hashed out the blueprint for what ultimately became the final bill.

Some big ideas—like limiting the tax break for employer-sponsored health insurance—lacked support, so committee aides lowered their sights. Making people pay the full price for over-the-counter medicines seemed like a way to reduce wasteful spending and generate money for the law's main goal: expanding health insurance to nearly every American.

An objection came from William Pewen, senior health-policy adviser to Maine Republican Sen. Olympia Snowe.

He believed the tax-free treatment could lower health costs and thought everyone should have access to a flexible-spending account. He told the group that he takes over-the-counter Prilosec, a heartburn medication, which meant he didn't need a more expensive prescription drug.

"I didn't want to see us set up perverse incentives for people to use more costly drugs than they needed," Mr. Pewen says.

He proposed a compromise that he concedes "was not the ideal solution." People could spend tax-free dollars on over-the-counter drugs, but only if they got a doctor's prescription. It wasn't exactly a new idea: Medicaid, the federal-state program for the poor, already covers some over-the-counter drugs if they are prescribed.

So essentially a staffer told an anecdote, heads nodded, a compromise was struck and the language made its ways into the bill. This is how the sausage gets made. But it gets worse:

...Congress's number-crunchers estimated the change would generate $5 billion over a decade. Hardly anyone noticed it, even as it stayed in the bill through passage in March 2010.

Only after the president's signature was dry did the American Medical Association realize what had happened and send a letter to the government warning of unintended consequences, including more office visits and extra paperwork.

Sure enough, when the change took effect Jan. 1, patients began bringing lists of over-the-counter drugs to office visits and also requesting over-the-counter prescriptions by phone, doctors says.

It's almost as if no one had the chance to fully read and digest a 2,000 bill before they voted on it! And given that the congressional "number crunchers" -- what I am guessing is a reference to the CBO -- scored the measure as a $5 billion revenue gain while the actual impact is proving to be much more uncertain, one can't help but wonder how many of the legislation's myriad other provisions will also turn out to produce less revenue than anticipated. And remember, a big selling point of Obamacare was that it was fiscally responsible, an argument sure to prove ever more fictitious as time passes.

To summarize, a group of central planners crafted far-reaching legislation based on little more than intuition and anecdote, and are now meeting unintended consequences. Welcome to the knowledge problem.